Perion Network Ltd (PERI): 2nd Position Statement – Ronen Shilo (August 30, 2016) by Robert Leitz, Iolite Partners
I urge all shareholders to vote “AGAINST” Proposal One and “FOR” Proposal Two.
On August 1, 2016, I exercised my right as a shareholder and requested that Perion’s board of directors (“Board”) convene a shareholders meeting to consider amending Perion’s articles of association to replace the staggered board structure with annual election of all directors. That staggered structure contradicts basic corporate accountability to shareholders.
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While the meeting has been convened, the Board has avoided accountability and instead proposed a hybrid structure that will result in annual election of directors only in 2018. The Board also objected to my proposal that shareholders will be able to replace directors via simple majority, which would implement proper governance. This reflects the current Board’s philosophy of entrenching itself rather than willingly facing annual evaluation. The Board’s proposal is bad for Perion, which cannot afford another two years of stagnation. Perion’s rapid deterioration requires immediate action.
This same failure of accountability is reflected in the Board not directing Perion’s affairs and strategy. The Board has not overseen management, but has rather been driven BY management. Over the past two years, I repeatedly raised with the Board my serious concerns concerning Mr. Mandelbaum’s performance as CEO. I corresponded with the former chairman, Tamar Gottlieb, in March and July 2015, and current chairman Alan Gelman, multiple times, raising concerns that Mr. Mandelbaum’s decisions and direction have failed, including:
- Not leveraging the merger with Conduit for real re-branding (not just changing Perion’s logo).
- Keeping senior people.
- Not building a strong management team or “growing” a strong #2 executive.
- Not having ANY marketing OR product people, and as a result:
- Perion has no vision
- Perion is NOT product-driven
- Perion avoids developing new product(s) based on current assets
- Perion cannot stop the freefall of its stock without a “story” to the market
Despite each chairman’s agreeing that Mr. Mandelbaum should be replaced, they failed to act.
In my recent meeting with Mr. Gelman on May 15, 2016, he indicated that a transition period for replacing Mr. Mandelbaum would begin (I am aware that discussions were held with a potential replacement). I was therefore surprised to learn from the Board’s position paper that it concluded that Mr. Mandelbaum’s service as CEO suits the best interests of Perion and therefore declined to accept his resignation – as if there is nobody better fit to lead Perion. To my disappointment, Perion’s Board did not hold management accountable, and Perion’s disintegration continues rapidly. It is furthermore unclear whether the entire Board supported that decision.
The adoption of Proposal Two would introduce opportunity for change and a chance to rescue Perion, while Proposal One would continue the deterioration under the current regime. Perion’s shareholders should not lose hope – they deserve more. Perion is a profitable company. With new management, branding strategy and smart cash usage, Perion will become a successful, growing company. A vote in favor of Proposal Two is a vote for hope and change, and against the current, failed regime.